Newspaper article THE JOURNAL RECORD

Purchasing Managers' Index Lowest since December '91

Newspaper article THE JOURNAL RECORD

Purchasing Managers' Index Lowest since December '91

Article excerpt

NEW YORK (AP) _ The manufacturing sector contracted sharply in June, corporate purchasing executives said in a survey that also suggested the economy is unlikely to improve on its lackluster performance any time soon.

The purchasing managers' index, a measure of economic activity in a wide range of manufacturing companies, fell to 48.3 percent in June from 51.1 percent in May and 49.7 in April, the National Association of Purchasing Management said Thursday.

That represents the index's lowest level since December 1991 and its second month below 50 percent this year. A reading below 50 percent indicates the manufacturing economy is generally contracting.

"To put it bluntly, it suggests that the overall economy can't go anywhere very fast, either," said David Wyss, chief financial economist at DRI-McGraw Hill Inc. in Lexington, Mass.

"I don't think it means we're going back into recession," he said. "It simply means we're not expanding as fast as we want to."

Wyss cited two survey findings as particularly ominous: a decline in new orders and a contraction in manufacturing employment. The fall in new orders, for just the second time in the past two years, bodes ill for future production.

The decline in manufacturing employment, Wyss said, makes it difficult for the overall economy to move forward.

The purchasing managers' employment index fell to 42.4 percent from 43.4 percent in May and its lowest level since January 1992. The association's new orders index fell to 49 percent, down sharply from 53.5 percent in May and its lowest level since September 1992.

On Wednesday, the Commerce Department reported factory orders declined 1.4 percent in May, the third contraction in three months.

Other data this week seem to jibe with the gloomy tenor of the purchasing managers' survey results. The Commerce Department reported its Index of Leading Indicators fell 0.3 percent in May. The Conference Board said consumer confidence declined in June, and the government reported new home sales fell 21 percent in May. …

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